Ex-Accountant Non-Complying

We have a tax preparer locally who has few clients that are coming on board with me. The clients all spoke to him over the phone to give all their files to me. He is taking too long on getting me the files. Does anyone have any templates for a release of records letter? Once a release letter is issued to him, how long does he have to comply? Can I pick up the records from the office once I have the release letter with me? Thank you.

He doesn’t have to give anything except client records back to the client (or to you with written permission).

The previous preparer has no obligation to provide anything to you. He had an obligation to return the client's source documents, and a copy of the completed return(s), to the client.

I had an ex-client, a lawyer of course, who expected me to be the "document donkey" for the new preparer. Nope. First she tried to say in an email that I was required to provide the documents to the new preparer, which I ignored. Then she was eventually informed about Sec. 7216, but even with a proper consent to disclose form, I still ignored her, as our engagement was complete.

The last person I want to help is a client who has just fired me. Here’s an imaginary scenario of how that might play out :

Ex-client : “ Now that I’ve fired you , how would you feel about wasting nonbillable time on inane admin task to help the person who is your replacement ? “

Fired tax preparer : Suck on it

Of course this is one of the reasons we don't get depreciation schedules and basis worksheets with new clients. IRS needs to make this information part of the tax return.

I see everyone's point but to maintain a better professional image, I would not hesitate or make it difficult to give clients all their files. I have gone through this on both ends and have maintained a cordial relationship. Thanks for everyone's input.

I see everyone's point but to maintain a better professional image, I would not hesitate or make it difficult to give clients all their files. I have gone through this on both ends and have maintained a cordial relationship. Thanks for everyone's input.

I think the answers you see are because the title says “non-complying” which isn’t quite accurate.

I provide depreciation schedules with the client copy. I don’t provide basis schedules except with the 1040 (becuase frankly I don’t know if they are accurate at the entity level for non-1040 clients).

If a clients asks for a copy of their return, even though they have it, I’ll provide it again.

But I’m not going to release my workpapers for liability reasons, or “all my files” which could take substantial time. If they have a specific request for something I’ll send it.

I have a local preparer who is getting ugly with me becuase I won’t provide last year’s tax return for a client. The client never paid me for it and owes me over $3,000. That return is my only leverage to get paid (and it was actually provided once but they lost it).

I have a local preparer who is getting ugly with me becuase I won’t provide last year’s tax return for a client. The client never paid me for it and owes me over $3,000. That return is my only leverage to get paid (and it was actually provided once but they lost it).

I was in a similar situation and I told the prior preparer that he can pay me for a copy or get a transcript. End of story never heard back from them again.

Reasonable Copy charge - say $1 per/page?
Payable Cash-on-delivery

We have a tax preparer locally who has few clients that are coming on board with me. The clients all spoke to him over the phone to give all their files to me. He is taking too long on getting me the files. Does anyone have any templates for a release of records letter? Once a release letter is issued to him, how long does he have to comply? Can I pick up the records from the office once I have the release letter with me? Thank you.

This isn't noncompliance. To send tax information to a third party a consent in accordance with §7216 must be given, and even for non-tax documents it isn't the worst practice in the world to require that the request be made in writing as well.

I'm all for professional courtesy, but if I've already given a client these documents then I'm not going to drop everything and give extra copies to the successor accountant at the drop of the hat. It's not my highest priority. And if I get a whiff of the successor accountant being snippy or threatening with me (which has happened), its priority falls.

How long has this saga gone on?

It's been going on for couple of weeks. The only issue is that there are payroll deposits that are due as well as sales tax filings. He's slowly providing documents but for selective clients. One item on my mind are payroll records. I know they use QuickBooks - are they obligated to give me backup of the QuickBooks file which has all the employees info so that I don't have to recreate all the records from the beginning of the year . Thanks for your input missingdonut!

They are not obligated to give you the QB files. The accountant should be giving the client detailed reports each pay period for payroll and detailed GL and financial reports for each period. My QB files have my own personal notes which I have no intention of sharing.

A couple of weeks does sound a bit long. At this point, the predecessor accountant could be getting himself liable for penalties.

Cathy is correct; there is no obligation to send the QB file. Think of it this way: if you used Sage 50 in your practice rather than QB, would you still be demanding a file backup? Of course not. We also don't have an obligation to send our tax program files to successor accountants, for good reason.

As much as it sucks to reenter data, do you trust the previous accountant enough to just use his setup? And even if you do, remember that there are multiple ways to achieve the same result in accounting, and if your brain is wired differently from the predecessor you could make mistakes from using the predecessor's QB file. Spending an hour or two setting a file up "your" way might save a lot of headaches down the road.

A former client used Peachtree. I had his partner send me the reports in Excel format and I imported them into QB. For an extra fee, the ex may do this or export the GL, the Chart of Accounts, vendors and customers.

It's been going on for couple of weeks. The only issue is that there are payroll deposits that are due as well as sales tax filings. He's slowly providing documents but for selective clients. One item on my mind are payroll records. I know they use QuickBooks - are they obligated to give me backup of the QuickBooks file which has all the employees info so that I don't have to recreate all the records from the beginning of the year . Thanks for your input missingdonut!

This depends on who created the QB file, but the accountant is not obligated to provide YOU anything--it is strictly between the former accountant and your new client. If it was originally supplied by the client to the former accountant, and they are not releasing it, then it is a problem and the client must address it. If the accountant created the QB file, they are not required to release it, even upon request. There have been a few instances I have seen or been involved in where a client thought they were entitled to accounting data files from Quickbooks, Sage 50, etc., only to eventually find out (including via their lawyers), that they were not. This include the client claiming that paying monthly fees for routine accounting meant they had "paid" for the data file, but not the case. If the accountant created the accounting data file, it is treated like working papers. If the client provided the accounting data file, then it is treated as original client documents.

Thank you CornerstoneCPA! I appreciate everyone's input!

Oh, one thing I meant to state is none of us like having a client go elsewhere unless it is just a problematic client, in which case I generally disengage before they have a chance to leave on their own. Regardless, I fully cooperate in providing records, including some I do not technically have to provide, as long as they do not owe me any money. If they owe me money, they only get back their original documents, but nothing else I created and that they might need for a smooth transition. Why? I care about my reputation and do not care to deal with an ethics complaint if a client is disgruntled for any reason. It is the same reason I do not withhold depreciation and basis schedules from client copies of tax returns--I know of several local EAs and CPAs that do this, and it irritates me to no end. I personally think it is HIGHLY unethical to withhold schedules that were used to calculate reported values on tax returns.

Side note, a few months ago I did step it up a few notches by delivering the documents to my lawyer, and demanded that the client sign an affidavit acknowledging receipt of all documents--that is how much I distrusted the client after I dug into their work. I was actually going to disengage from the client the very day they demanded their records because of "concerning" activity I found while digging into their information, so I also wanted to let them know I was serious about the entire situation by involving my lawyer, which I typically would NOT do. Easily the least pleasant client I have ever encountered--no wonder they are in such a compliance mess. It taught me another valuable lesson about client quality control...I am getting to the point that if the prospective client is part of a certain industry or if they have compliance issues to sort out, I am unlikely to accept them, even if they are willing to pay retainers.

Perhaps your situation required the services of a Lawyer but in general when I have faced a situation with a "Shady Prospect" while I am reviewing the documents, I simply state that I will NOT be able to prepare that type of return because of (give a reason), simply have them pick up their documents and sign a receipt that they got back their property.

If a client (signed engagement letter) turns out to be shady, then a disengagement letter is sent and a receipt of any property delivered is required.

In my opinion if a person tries to sue you that you did not deliver their property then a signed receipt (without lawyer involved in signing of the receipt) should be sufficient proof in any court of law.